The idea behind bankruptcy is to assist a person in resolving debt and
learning better financial management. Being able to start again is not
just about leaving the past behind, it also requires a person to protect
their remaining assets. The benefits of this can be maximized by
NOT borrowing, selling or depleting these assets before the bankruptcy is filed.
Bankruptcy attorneys often meet clients who have engaged in desperate measures
in order to stay on top of increasing debt. This behavior occurs under
the misconception that those positive assets would be lost after filing
the bankruptcy. In reality, it is more difficult to recover from a bankruptcy
if a person does not have the basics, such as a home, clothing and transportation.
In some cases, the basics may also include retirement accounts, unemployment
benefits and other tools of your trade.
Bankruptcy Protection and Your Assets
In most cases, bankruptcy will provide protection for your assets. A
Chapter 7 bankruptcy filing, also known as a "straight bankruptcy," will protect
assets that are considered exempt, which means the majority of people
filing a Chapter 7 will be able to hold on to what they own. If there
are assets that have a higher value than what is exempt by law, an "adjustment
of debts" under
Chapter 13 bankruptcy can help a person keep what is non-exempt. If someone has assets that
are not considered exempt, an experienced bankruptcy attorney can develop
a plan to protect the assets when the case is officially filed.
Bankruptcy Can't Bring Back What Has Already Been Lost
While bankruptcy does provide some protections, it cannot bring back what
has already been lost. Assets that have been spent, sold or borrowed against
to avoid financial disaster could have been saved if the bankruptcy had
been filed sooner. The result of this is a person who will not have anything
left with which to start life over.
Many people facing bankruptcy do not understand the consequences of borrowing,
selling and spending and are unaware of which assets are protected under
law. They also do not know how to place themselves in the optimal position
prior to filing the case.
Consequences of Filing Without a Bankruptcy Attorney
There are serious and long-lasting consequences to bankruptcy, which is
why the decision to file should not be made without an attorney. An example
would be a middle-aged woman taking money out of her retirement savings
in order to pay debts that would be written off by a bankruptcy. Doing
this is harmful to her financial future as a retired person, as she would
have nothing to fall back on. Another scenario is a married couple selling
a reliable vehicle that has been paid off, in order to resolve bills.
They are operating on the assumption the vehicle would be taken from them
in a bankruptcy filing, and they would be left with an older model that
cannot be relied on to transport them to their jobs. This is the opposite
of the fresh start they are seeking. The couple would have been able to
keep their vehicle by filing either a Chapter 7 or a Chapter 13 bankruptcy,
after consulting an attorney for a strategic plan to protect assets.
Many times, people seek legal advice only after they have gotten into financial
trouble, as a result of acting on unwise decisions. Painful outcomes can
be avoided by planning ahead of a bankruptcy filing by taking the time
to get legal advice and create a plan for the filing. The main objective
of bankruptcy is a fresh start, in order to build a better life on a stronger
foundation. By taking the time to be advised of rights and protections,
most assets can be protected from creditors.
Are You Considering Bankruptcy?
Those who are considering a bankruptcy filing and live in the greater Dallas-Fort
Worth area of Texas should consult with an experienced bankruptcy attorney
to avoid the mistakes that may result in the loss of valuable assets.
If you would like to see if bankruptcy is right for you, feel free to
set up a free consultation by either calling us or filling out our